Justia Insurance Law Opinion Summaries

Following an accident, Jeremy Marchek sued his auto insurer, United Services Automobile Association (USAA), claiming that the company breached the terms of the policy it issued to him. Marchek argued that USAA wrongfully failed to compensate him for sales taxes and mandatory fees necessary to purchase a replacement vehicle after USAA declared his vehicle to be beyond repair. USAA paid Marchek the pre-accident value of his vehicle minus a deductible but did not include taxes and fees in the payment.The United States District Court for the Western District of Michigan dismissed Marchek’s complaint, ruling that USAA was not contractually obligated to compensate him for taxes and fees. The district court found that the insurance policy did not require USAA to cover these additional costs when calculating the actual cash value (ACV) of the vehicle.The United States Court of Appeals for the Sixth Circuit reviewed the case and reversed the district court’s decision. The appellate court held that the plain language of the insurance policy plausibly requires USAA to compensate Marchek for the sales taxes and mandatory fees necessary to purchase a replacement vehicle. The court found that the policy’s definition of ACV, which is “the amount that it would cost, at the time of loss, to buy a comparable vehicle,” does not unambiguously exclude taxes and fees. Therefore, the case was remanded for further proceedings to determine whether USAA breached the contract by not including these costs in its payment to Marchek. View "Marchek v. United Services Automobile Association" on Justia Law

Torrey Kath brought a personal injury lawsuit against Michael Prochnow and Prochnow Farms, alleging that Prochnow moved a semi-truck while Kath was underneath, causing significant injury. Kath and Prochnow entered into a Miller-Shugart agreement, where Prochnow accepted damages, and Kath agreed to collect solely from Prochnow’s insurers. The case was dismissed with prejudice after a stipulation of dismissal was filed.Kath then filed a declaratory judgment action against Farmers Union Mutual Insurance Company (FUMIC), which insured Prochnow under a farm liability policy. Kath sought declarations that the policy covered his injuries and that the Miller-Shugart agreement was reasonable and binding on FUMIC. The District Court of Stutsman County granted Kath summary judgment on the coverage issue, interpreting the policy’s motor vehicle exclusion as not applying to the coverage added by a farm employer liability endorsement.FUMIC moved for summary judgment, arguing it had no duty to indemnify Prochnow because the personal injury action had been dismissed with prejudice. While this motion was pending, Kath and Prochnow successfully moved to vacate the dismissal and entered a $2 million judgment against Prochnow, to be paid solely by FUMIC. The district court then denied FUMIC’s motion for summary judgment, holding that the judgment in the personal injury action rendered FUMIC’s motion moot and granted summary judgment in favor of Kath on the second count of his complaint.The North Dakota Supreme Court reviewed the case and reversed the district court’s judgment. The Supreme Court held that the policy’s motor vehicle exclusion applied to Kath’s injuries, and thus, the policy did not provide coverage. The court concluded that the endorsement did not supersede the motor vehicle exclusion and that the policy, when read as a whole, excluded coverage for injuries related to the use of motor vehicles. View "Kath v. Farmers Union Mutual Ins. Co." on Justia Law

The City and County of Honolulu and the County of Maui sued several fossil fuel companies, including Aloha Petroleum, Ltd., for climate change-related harms. Aloha sought a defense in these suits from two insurance companies, National Union Fire Insurance Company of Pittsburgh, PA, and American Home Assurance Company, both subsidiaries of American Insurance Group (AIG). The insurance companies had issued several commercial general liability (CGL) insurance policies to Aloha’s parent company. The case revolves around whether these policies obligate AIG to defend Aloha in the counties’ lawsuits.The United States District Court for the District of Hawai‘i reviewed the case and certified two questions to the Supreme Court of the State of Hawai‘i. The first question asked whether an “accident” includes an insured’s reckless conduct. The second question asked whether greenhouse gases (GHGs) are “pollutants” as defined in the policies’ pollution exclusions. The District Court noted that the counties’ lawsuits allege Aloha acted recklessly by emitting GHGs and misleading the public about the dangers of these emissions.The Supreme Court of the State of Hawai‘i answered both certified questions. The court held that an “accident” includes reckless conduct, aligning with its precedent in Tri-S Corp. v. Western World Ins. Co., which held that recklessness may be an “occurrence.” The court clarified that an “accident” includes conduct where harm was not intended or practically certain. The court also held that GHGs are “pollutants” under the insurance policies’ pollution exclusion clause, as they are “gaseous” “contaminants” that cause “property damage” when released into the atmosphere. The court concluded that the pollution exclusion bars coverage for emitting or misleading the public about emitting GHGs. View "Aloha Petroleum, LTD. v. National Union Fire Insurance Company of Pittsburgh, PA." on Justia Law

Glenn O. Hawbaker, Inc. (GOH) engaged in a scheme to underpay its employees by misappropriating fringe benefits owed under the Pennsylvania Prevailing Wage Act (PWA) and the Davis-Bacon Act (DBA). This led to two class-action lawsuits against GOH. GOH sought coverage under its insurance policy with Twin City Fire Insurance Company (Twin City), which denied coverage and sought a declaratory judgment that it had no duty to provide coverage. GOH and its Board of Directors counterclaimed, alleging breach of contract and seeking a declaration that certain claims in the class actions were covered under the policy.The United States District Court for the Middle District of Pennsylvania dismissed GOH's counterclaims, concluding that the claims were not covered under the policy due to a policy exclusion for claims related to "Wage and Hour Violations." The court also granted Twin City's motion for judgment on the pleadings, affirming that Twin City had no duty to defend or indemnify GOH for the class-action claims.The United States Court of Appeals for the Third Circuit reviewed the case and affirmed the District Court's judgment. The Third Circuit agreed that the claims in question were not covered under the policy because they were related to wage and hour violations, which were explicitly excluded from coverage. The court emphasized that the exclusion applied broadly to any claims "based upon, arising from, or in any way related to" wage and hour violations, and found that the factual allegations in the class actions were indeed related to such violations. Thus, Twin City had no duty to defend or indemnify GOH under the terms of the policy. View "Twin City Fire Insurance Co. v. Glenn O. Hawbake, Inc." on Justia Law

The case involves a class action against Progressive Northwestern Insurance Company, which allegedly violated Arkansas insurance law through a uniform adjustment practice. The named plaintiff, Misty Huddleston, claims that Progressive improperly reduced medical expense insurance coverage (Med-Pay) benefits by considering payments from secondary health-care insurance. This practice, documented as "Code 563," adjusts Med-Pay benefits based on amounts paid or anticipated to be paid by the insured’s health-care provider, rather than the actual billed amount.The Pope County Circuit Court certified the class, which includes all Arkansas residents who had Med-Pay claims adjusted by Progressive using Code 563 and received less than the policy limit for their claims between February 16, 2017, and September 28, 2023. Progressive appealed the certification, arguing that the claims were not common to the class, did not predominate over individual issues, Huddleston was not typical of the class, and a class action was not a superior method for handling the claims.The Supreme Court of Arkansas reviewed the case and affirmed the circuit court’s decision. The court found that the commonality requirement was met because the core issue—whether Progressive’s adjustment practice was lawful—applied uniformly to all class members. The court also determined that common questions predominated over individual issues, as the legality of the adjustment practice was central to the case. Huddleston’s claims were deemed typical of the class because they arose from the same conduct by Progressive. Finally, the court held that a class action was the superior method for adjudicating the claims, as it would avoid repetitive litigation and ensure consistent adjudications. View "PROGRESSIVE NORTHWESTERN INSURANCE COMPANY v. HUDDLESTON" on Justia Law

In this case, the plaintiff, MVT Services, LLC (MVT), purchased a workers’ compensation and employers’ liability policy (WC/EL Policy) from Great West Casualty Company (Great West) for coverage from January 1, 2013, to January 1, 2014. MVT also entered into a Staff Leasing Agreement with OEP Holdings, LLC (OEP) and purchased a non-subscriber insurance policy from Crum & Forster Specialty Insurance Company (C&F). On August 13, 2013, MVT terminated its Texas coverage under the WC/EL Policy, effective September 16, 2013. On September 15, 2013, a day before the termination, MVT’s semi-tractor trailer crashed, killing driver Lawrence Parada. Parada’s widow filed a lawsuit against MVT. Great West denied coverage, leading MVT to seek defense under the C&F Policy.The United States District Court for the District of New Mexico found that Great West breached its duty to defend MVT, causing MVT to incur damages. The court awarded MVT damages and attorney fees. Great West appealed, arguing that the district court erred in finding that the Parada lawsuit would have resolved within the policy limit and that the breach did not proximately cause the damages.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court held that the district court did not clearly err in its factual findings that MVT would have invoked the Exclusive Remedy defense and that the gross negligence claim would have resolved within the policy limit. The court also found that the district court did not err in awarding damages for the $250,000 retention under the C&F Policy, the $250,000 MVT contributed to the settlement, and $41,476.84 in attorney fees. The court affirmed the district court’s award of attorney fees, concluding that Great West failed to show the district court committed legal error or clearly erred in its fact findings. The Tenth Circuit affirmed the district court’s judgment. View "MVT Services v. Great West Casualty Company" on Justia Law

Kevin Klabon, a technician for CMI Legacy, LLC, was injured in a car accident while driving a company van. The accident was caused by Rodrigo Canchola-Rodriguez, an underinsured driver. Klabon received workers' compensation benefits from CMI's carrier, Pinnacol Assurance, and settled with Canchola-Rodriguez's insurer for $25,000. He then sought additional underinsured motorist (UIM) benefits from CMI's commercial auto insurer, Travelers Property Casualty Company of America, which valued his claim at $78,766 but paid only $45,766.68.Klabon sued Travelers in state court for unreasonable denial and delay of UIM benefits, alleging bad faith and breach of contract. Travelers removed the case to federal court and moved for summary judgment, arguing that Klabon's receipt of workers' compensation benefits barred his UIM claim under Colorado's Workers' Compensation Act (WCA). The United States Magistrate Judge certified the question to the Colorado Supreme Court, given conflicting precedents and significant public policy implications.The Colorado Supreme Court concluded that an employee injured by a third-party tortfeasor and who receives workers' compensation benefits is not barred from suing their employer's UIM insurer. The court held that the WCA's exclusivity provisions immunize only employers and their workers' compensation carriers, not separate UIM insurers. The court also determined that a suit to recover UIM benefits does not constitute a suit against the employer or co-employee and thus is not barred by the WCA. The court answered the certified question in the negative, allowing Klabon to pursue his claim against Travelers. View "Klabon v. Travelers Property Casualty Company of America" on Justia Law

Plaintiffs M.S. and L.S. sought insurance coverage for mental health treatments for their child, C.S., under a health benefits plan provided by M.S.'s employer, Microsoft Corporation. The plan, administered by Premera Blue Cross, is subject to ERISA and the Parity Act. Premera denied the claim, stating the treatment was not medically necessary. Plaintiffs pursued internal and external appeals, which upheld the denial. Plaintiffs then sued in federal district court, alleging improper denial of benefits under ERISA, failure to produce documents in violation of ERISA’s disclosure requirements, and a Parity Act violation for applying disparate treatment limitations to mental health claims.The United States District Court for the District of Utah granted summary judgment to Defendants on the denial-of-benefits claim but ruled in favor of Plaintiffs on the Parity Act and ERISA disclosure claims. The court found that Defendants violated the Parity Act by using additional criteria for mental health claims and failed to disclose certain documents required under ERISA. The court awarded statutory penalties and attorneys’ fees to Plaintiffs.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court vacated the district court’s grant of summary judgment on the Parity Act claim, finding that Plaintiffs lacked standing to bring the claim. The court reversed the district court’s ruling that Defendants violated ERISA by not disclosing the Skilled Nursing InterQual Criteria but affirmed the ruling regarding the failure to disclose the Administrative Services Agreement (ASA). The court upheld the statutory penalty for the ASA disclosure violation and affirmed the award of attorneys’ fees and costs to Plaintiffs. View "M.S. v. Premera Blue Cross" on Justia Law

A motor vehicle collision occurred in Sussex County, Delaware, involving Joanne Dudsak, a New Jersey resident insured by New Jersey Manufacturers (NJM), and Christopher Koester, a Maryland resident insured by Allstate Insurance Company. NJM paid Personal Injury Protection (PIP) benefits to Dudsak and sought inter-company arbitration in Delaware to recover these costs. Allstate opposed, arguing that NJM's policy, being from New Jersey, did not qualify for arbitration under Delaware law, which requires the vehicle to be registered in Delaware for PIP subrogation rights.The arbitrator ruled in favor of NJM, awarding the full amount and rejecting Allstate's jurisdictional challenge. Allstate then filed a Petition to Vacate the Arbitration Award in the Delaware Chancery Court, arguing that the arbitrator exceeded his authority. NJM moved to dismiss the petition, claiming the issue was moot because Allstate had agreed to tender its policy limits, which would extinguish NJM's subrogation rights under Delaware law.The Delaware Chancery Court denied NJM's Motion to Dismiss, finding that a real dispute remained. The court then addressed the merits of Allstate's Motion for Summary Judgment. The court applied the standard of review under 10 Del. C. §5714(a)(5), which allows vacating an arbitration award if the arbitrated claim was barred by limitation and the objection was raised from the outset. The court found that §2118 of the Delaware PIP statute applies only to vehicles required to be registered in Delaware and does not cover out-of-state policies like NJM's. Consequently, the arbitrator exceeded his authority by accepting jurisdiction over the case. The court granted Allstate's Motion for Summary Judgment, vacating the arbitration award. View "Allstate Insurance Co. v. New Jersey Manufacturers Insurance Co." on Justia Law

Baxter Senior Living, LLC, an assisted living facility in Anchorage, Alaska, obtained an insurance policy from Zurich American Insurance Company covering various types of losses, including those caused by microorganisms. In response to the COVID-19 pandemic, Baxter implemented several operational restrictions and incurred additional costs. Despite these measures, the facility experienced COVID-19 cases among staff and residents. Baxter filed a claim with Zurich for loss of business income due to the pandemic, which Zurich denied.Baxter then filed a complaint in February 2022, alleging breach of contract and other claims, arguing that the presence of COVID-19 and related governmental orders caused a loss of use of its property, constituting "direct physical loss of or damage to" the property under the insurance policy. Zurich moved to dismiss the case, arguing that neither the presence of the virus nor the governmental orders constituted "direct physical loss of or damage to" property. The U.S. District Court for the District of Alaska certified two questions to the Alaska Supreme Court regarding the interpretation of this phrase in the context of the pandemic.The Alaska Supreme Court reviewed the certified questions and concluded that neither the presence of the COVID-19 virus at an insured property nor the operational restrictions imposed by pandemic-related governmental orders constitute "direct physical loss of or damage to" the property under a commercial insurance policy. The court emphasized that "direct physical loss" requires some physical alteration or deprivation of possession of the property, and "direct physical damage" requires a tangible alteration of the property. The court noted that the presence of the virus does not physically alter the property but merely attaches to it, and the operational restrictions do not cause a physical alteration or deprivation of possession. Therefore, the court answered both certified questions in the negative. View "Baxter Senior Living, LLC v. Zurich American Insurance Company" on Justia Law